Home Equity Loan Rates in 2021
A home equity loan can be a great way to access a considerable amount of money. These loans can help you cover home-improvement costs, pay off college debt or medical costs, or cope with unemployment and other misfortunes. Join us as we reveal who offers the most favorable home equity loan rates.
8 Best Home Equity Lenders - Summary
If you’re looking for optimal HELOC rates, Spring EQ isn’t a good pick: Spring does not offer HELOC financing. However, this Philadelphia-based lender brings competitive loan terms and a quick online application process to the table. Read Review
- •Competitive loan terms
- •Easy online application process
- •Reputable lender
Well-known in the credit-card market, Discover is also one of the largest issuers of fixed-rate home equity loans in the industry. Read Review
- •Best for web-savvy users
- •Favorable loan terms
- •Excellent transparency
Founded more than two decades ago, Northpointe Bank has built a solid reputation in equity financing. The bank offers both home equity loans and HELOCs. The main disadvantage is a lack of transparency. Read Review
- •Offers both loans and HELOCs
- •Forgiving loan requirements
- •Offers fixed and variable rates
Founded in 2018, Figure has attracted attention for its use of AI and blockchain technology to streamline the process of getting home equity financing. The company offers favorable rate range for its home equity products. Read Review
- •Automated valuation eliminates appraisal fees
- •Quickest online application process
- •Rates as low as 2.49%
U.S. Bank is one of the oldest and most reputable financial institutions in America. The bank offers both home equity loans and HELOCs with low APR rates and various discounts for loyal customers. Read Review
- •Available in 40 states
- •Offers both equity loans and HELOCs
- •Good APR rates
BB&T is a lender that primarily operates in the Southeast. While its state coverage is somewhat limited and the lender lacks transparency, its equity loans and HELOCs are considered top-class and come with some of the best fixed rates currently available. Read Review
- •Electronic document signing
- •Low starting APR
- •Some fees are waived
Another lender that operates mainly in the South, Regions Bank allows borrowers to take out smaller loans and offers extremely low introductory APR rates. The bank currently offers both HELOCs and home equity loans. Read Review
- •Introductory APR less than 1%
- •Closing costs covered for smaller loans
- •Low fees
Citibank offers loans and HELOCs in all states apart from Alaska. While its APR rates are nothing to write home about, the lender waives certain fees, which makes it worthy of consideration. Read Review
- •Available across the US
- •Huge HELOC loans
- •Interest-only payments
How We Evaluate Home Equity Lenders - Our Methodology
If you sold your home tomorrow, how much money would you put in your pocket after paying off your mortgage?
That amount - the difference between your home’s market value and your mortgage balance - is known in the finance world as equity, and it’s the biggest asset most homeowners have.
Like any other asset, it can be used as collateral to secure a loan: a home equity loan or a home equity line of credit. With a loan, you get the lump sum all at once. A HELOC is a revolving line of credit like a charge card.
When looking at the leading banks for home equity loans, you need to make sure you’re making a well-considered, educated decision. Taking out a second mortgage is a serious financial decision, not to be taken lightly.
You’re putting up your house as collateral, and if you fail to pay on time, lenders can foreclose in the worst case, forcing you to sell your home so you can pay off the loan.
To get the best possible lending terms, compare the offers from multiple banks, mortgage companies, and credit unions. Here, we’ll lay out the evaluation criteria we rely on when rating the lenders who provide these loans.
Consult it when you’re browsing for favorable rates on home equity loans. It should help you find the best terms for your needs.
Types of Equity Financing
The first decision you need to make is whether you are looking for a home equity loan or a home equity credit line. One factor to take into account is that some banks have temporarily stopped accepting applications for HELOCs due to the coronavirus pandemic and its impact on the economy.
In most cases, you should base your choice on how much money you need right away. If you need a one-time large infusion of funds for renovating your house or debt consolidation, you should look for home equity loans.
However, if you need a pool of funds that you can access when the need arises over a longer period, then a HELOC is what you’re looking for.
Terms and Fees
Like all loans, home equity financing comes with a set of fees and charges that can add to the cost of borrowing.
Whether you’re getting a loan or an equity line of credit, the lender will charge interest on your balance. Interest rates for home equity loans typically range from 3.25% to 9.25%. Rates for HELOCs vary among vendors. We have seen rates as low as 2.99% and as high as 21%. The lowest rates are reserved for those with impeccable financial records, while those with lower credit scores can expect higher interest charges.
Both equity loans and HELOCs can come with closing fees - usually 2% to 5% of the total loan amount. Lenders sometimes offer to reduce or waive this fee altogether, but read the fine print: This may trigger other fees or requirements. Closing costs usually include home-appraisal charges, credit-check or application fees, notary costs, and so forth.
HELOCs usually have ongoing costs and restrictions. Watch out for annual fees, early termination fees, and inactivity fees. Even the leading HELOC lenders might levy these charges - as well as minimum withdrawal requirements and other restrictions - to protect the return on their investment.
Be sure to document and compare the rates and fees of each lender so you can find or negotiate the best possible terms.
Equity financing isn’t granted to everyone who applies. Each lender has requirements that homeowners must fulfill to qualify for a loan. These eligibility requirements are mostly related to your equity, credit history, and overall financial standing. As always, it’s easiest to qualify for a loan if you are in such solid financial shape that you don’t need one.
Here are the most common requirements:
- Credit score over 620
- Equity is at least 15%-20% of the home’s value
- Debt-to-income ratio of 43% or less
In addition to reporting the loan rate and other metrics for each lender, we also take into account the difficulty of meeting the eligibility requirements.
Once you’ve chosen a lender, it’s time to apply for the loan. Most lenders allow you to fill out loan applications online, which streamlines the process and reduces COVID-19 health risks.
Lenders will require that you mail documents or email scans. Each lender has a different list of required documents. In most cases, the lenders require two years of tax returns, a copy of your deed, your employment history, and your debt history.
Determining who has the best rates is not as simple as evaluating terms and fees. Those are important factors, but we also look at how user-friendly and quick the application process is.
Top Home Equity Lenders - Fortunly’s Picks:
- Spring EQ - Best for forgiving loan requirements
- Discover - Best for tech-savvy people
- Northpointe Bank - Best for competitive loan rates
- Figure - Best for rapid approval
- U.S. Bank - Best for taking out large loans
- BB&T - Best for fixed-rate HELOCs
- Regions Bank - Best for lenders in the South and Midwest
- Citi Bank - Best for large HELOC loans
The Best Home Equity Loan Rates: Reviews
Founded in 2016, Philadelphia-based Spring EQ offers loans in 39 states and Washington D.C. The main advantages of choosing Spring EQ financing over other lenders are the ease of the application process, the speed with which your application is processed, and how quickly you receive funds.
There are two ways to apply for a loan with Spring EQ.
The first is to pick up the phone and call a Spring loan officer. Company representatives can advise you on your application and guide you through it. If you prefer, you can even fill out and submit your application at a Spring office.
The quicker way is to apply through Spring EQ’s website.
Like all home equity loan providers, Spring requires some information before you can get a quote: your employment history, mortgage balance, property information, home value, creditworthiness, and other basic details. After you provide the info, a soft credit check will be conducted and you’ll receive your rates.
If you decide to continue, you’ll need to talk with a Spring EQ loan officer to finish the application process.
After you finish the application, you usually get approved the same day. You’ll get access to funds in as little as 11 days.
Terms and Fees
Spring EQ offers some of the best rates you’ll find anywhere. The lender’s APRs range from 5.205% to nearly 14% depending on the borrower’s credit.
Spring EQ charges a $799 administration fee for processing your loan. You’re also responsible for third-party costs like credit checks and notary fees. Loans over $175,000 require an in-home appraisal, while those over $250,000 require title insurance, which the borrower pays for.
Spring EQ only offers loans, not lines of credit. The smallest amount you can borrow is $25,000, while the largest amount is $500,000. The repayment period ranges from five to 30 years.
Except for a minimum credit score of 680, Spring EQ does not disclose the qualification criteria.
Spring EQ offers competitive interest rates and a quick, painless online application process. The company’s main disadvantage is the lack of HELOC financing.
- Allows online loan applications
- Makes large and small loans
- Quick approval decisions and funding
- Transparent fees
- Helpful loan officers
Discover is a major credit card issuer - and one of America’s biggest players in the second-mortgage loans market. Launched in 1985 as a subsidiary of Sears, Discover became an independent company in 2007. Discover extends borrowers some of the market’s best terms on home equity loans, but it does not offer HELOCs.
Discover relies on online applications, since it has only one physical office, which is located in Greenwood, Delaware. Discover loan products are available in 48 states (Iowa and Maryland are excluded), so applying online is the only way to secure a loan from Discover.
This is not a negative. Online applications can be much quicker and easier than applying in person. Our review showed us that Discover is completely transparent, disclosing all the rates, terms, and fees on public loan pages. There’s no need to worry about hidden charges with a Discover loan.
The process for applying online and using the Discover home equity loan calculator is straightforward. Before you can get your rate, you must provide the sort of information required by most lenders: property information, mortgage balance, Social Security number, and all that jazz.
After getting a quote, you can hit the Apply button and provide some basic info, and Discover will provide loan options for you. The company does not divulge how long it takes for applications to be approved or how long you must wait before funds are disbursed.
Terms and Fees
Discover’s lowest APR rate, 3.99%, puts most of its competitors to shame. The upper limit is 11.99%. Discover offers only fixed-rate loans, so if you’re looking for inflation-indexed variable rates you should look further.
Discover does not charge any application, origination, or appraisal fees. Nor does Discover require a cash payment at closing. There’s no fee for paying off the loan early either, at least not after the first 36 months.
Loans range from $35,000 to $200,000, and the repayment period is 10 to 30 years. The allowed combined loan-to-value ratio is a generous 90%, compared to the industry standard of 80%.
To qualify for a loan, homeowners must meet a fairly standard set of prerequisites:
- Credit score: 620 or higher
- Debt-to-income ratio: 43% or lower
Discover is worth checking out. The lack of fees and processing charges is a big plus. The minimum loan amount of $35,000 might be too high for some borrowers.
- Low fixed-rate APR
- Almost no extra fees
- 90% loan-to-value ratio
- Standard eligibility requirements
- Available in 48 states
Northpointe Bank has been operating since 1999 from its headquarters in Grand Rapids, Michigan. In addition to the usual cocktail of banking services, Northpointe offers a variety of mortgage options, loans, and home equity financing. One major disadvantage of this lender is a lack of transparency: It discloses little information about its equity loans and HELOC rates until you are actually applying.
Unlike other lenders, Northpointe Bank does not allow you to complete your application online. You can prequalify online, however. Just fill out some basic information on the Northpointe website: name, contact data, loan amount, FICO score, and so on. This starts the ball rolling.
You won’t get a quote right away. Instead, you’ll be contacted by a loan officer via phone, email, or SMS.
Once you have been in contact with the bank’s loan agent, and provided more information, you’ll need to gather more required documents and send them to the bank’s offices. Only then will the bank prepare the final loan documentation. Approval time and waiting time for funds disbursement can vary.
Terms and Fees
Northpointe Bank offers both home equity loans and HELOCs but does not disclose its rates until you are negotiating terms. The bank offers both fixed and variable rates, which many homeowners will surely appreciate. The bank does disclose the fees associated with securing a loan:
- Application fee: $400
- Appraisal fee: $300 to $400
- Origination fee: 1% of loan
- Survey fee
- Title fee
- Recording fee
- Escrow fee
These are not the lowest home equity loan rates and fees we have seen - but remember that most lenders allow borrowers to negotiate fee reductions or waivers.
Northpointe Bank does not stray from industry standards when it comes to qualifying for a loan. You must have a credit score of 620 or higher and a debt-to-income ratio of 43% or lower.
Even with its lack of transparency, Northpointe Bank gathers mostly positive reviews online, and its requirements are relatively easy to meet. It’s a pity the loan application process can’t be completed online.
- Perfect credit not needed
- Reputable lender
- Good user reviews
- Low fees
- Solid APR
Often, the optimal interest rates for home equity loans do not come from banks and other traditional lenders, but from new, independent finance companies. Figure is such a company. Launched in 2018, the San Francisco-based company uses AI, blockchain technology, and advanced analytics to support a smooth, fully digital loan application process.
Figure’s application process is surely its pride and joy - and for good reason. Applications are completed entirely online at Figure’s website.
The process is quick and easy. You start by typing basic information - the kinds of personal details most lenders use in the prequalification process. Figure will respond with an offer that you can compare with deals you’ve received as proposals from other lenders.
If you’re happy with the HELOC interest rates that Figure has proposed, you can proceed to the next stage: information verification and documentation. Figure has automated the entire verification process. All you need to do is specify what banks you use, link your accounts, add some more information. Figure’s software will quickly and automatically verify everything that’s necessary to approve a loan. It performs these checks over encrypted data lines to protect your personal and financial information.
Once you’ve accepted the offered loan, the only barrier between you and financing is signing the documents. Figure’s got you covered here as well. In most cases, Figure can connect you with a digital notary so you can sign the documents while sitting at your home PC or laptop.
Figure says the approval process takes five minutes and you can receive funds in as little as five days.
Terms and Fees
Figure offers only fixed-rate HELOC financing; home equity loans are not available. While the lack of lump-sum loans is unfortunate, Figure is one of the few lenders offering HELOCs, as many lenders temporarily froze them due to the COVID-19 pandemic’s impact on the economy. Interest rates can be as low as 2.49% if you’re a credit union member and you enroll in Figure’s autopay program. Even if you are not eligible for the lowest rate, you’ll still be in a good spot. The APR goes up to 13.75%
Figure charges no prepayment penalty or check processing fees. Since Figure uses an AI-based automated valuation model to appraise your house, there are no appraisal fees either. Figure’s advanced technology can save you hundreds of dollars. The elimination of these fees give Figure a well-earned place on this list of the industry’s top lenders.
Figure does charge one major fee, however. The company requires that you withdraw the full amount of your HELOC immediately and pay 4.99% as an origination fee. The smallest loan you can get is $15,000, while the largest is $250,000. The repayment period ranges from five to 30 years.
Availability of Figure HELOCs: 41 states and the District of Columbia.
Eligibility requirements for Figure HELOCs are quite similar to those of other lenders:
- Minimum credit score: 640
- Debt-to-income ratio: 43% or less
- No bankruptcies in the last seven years
- No recent mortgage delinquencies
- No accounts in collections
- No foreclosures in the previous five years
Figure offers highly competitive rates and excellent terms for HELOCs. There are only two major disadvantages - Figure HELOCs are not available in every state, and the origination fee can be quite costly.
- Excellent online application process
- Quickest approval and funding time
- APR starts at 2.49%
- No appraisal fees
- Sign documents at home via digital notary
Founded way back in 1863, U.S. Bank is one of the oldest banks in the States. Today, it’s the fifth-largest bank in the US. Besides home equity loans, the bank also offers HELOCs, with loans going up to $750,000. U.S. Bank’s loans are available in 40 states.
You can apply for a U.S. Bank home equity loan or HELOC by going to one of the lender’s many branch locations, as well as over the phone or online. While most of us prefer online applications, especially due to the COVID-19 pandemic, we like to see lenders offer a variety of choices. After all, not all borrowers are tech-savvy enough to apply online.
The online application process can be done either by signing in to your U.S. Bank checking account or by creating a guest account. Then you’ll have to provide the same kind of information requested by most of the other lenders. This includes your name, marital status, and address, as well as information about your property, mortgages, income, and so on.
The application process itself is fairly quick and user-friendly, with plenty of short explainers on the way. After you finish the online application, U.S. Bank requires you to send the requested documents and then head to a branch to seal the deal. The bank does not divulge how long you’ll have to wait before the loan is processed and approved.
Terms and Fees
U.S. Bank offers both home equity loans and HELOCs. This is commendable, as many lenders stick to only one. For home equity loans, the APR starts at 3.80%. This is fairly competitive, but do note that this is the lowest rate you can get, so it’s reserved for those with great credit scores and those subscribed to Autopay. The repayment period allows flexibility since it can be as long as 30 years.
HELOCs come with a variable APR range of between 3.45% and 6.40%. The draw period can last up to 10 years. U.S. Bank offers some of the biggest loan amounts available. The smallest loan you can get is $15,000, while the biggest is $750,000 for most states. However, if you live in California, you can get up to $1 million.
For home equity loans comparisons, fees play a large role in determining which lender offers the best terms. U.S. Bank charges an early termination fee of 1% (up to $500) on home equity loans if you close the account within three years or earlier. In case your DTI ratio is 43% or less, the closing costs are waived. Paying a loan origination fee can also waive these costs.
HELOCs incur an annual fee of $90 after the first year. This can also be avoided if you have a Platinum Checking Package with the bank.
U.S Bank does not disclose its eligibility requirements, but it seems evident from the lender’s rates that the best ones are reserved for those with credit scores of 730+ and a DTI ratio of 43% or less.
U.S. Bank represents a more-than-solid choice for getting home equity financing. It offers competitive loan rates and presents borrowers with multiple ways to waive fees or get discounts.
- APR rates as low as 3.80%
- Reputable lender
- Closing costs can be waived
- No annual fee for Platinum Checking package members
- Loans up to $750K
BB&T is a large financial corporation that merged with SunTrust Banks in 2019 to form Truist Financial. However, for now, both SunTrust and BB&T continue to operate semi-independently.
Most of BB&T’s branches are located in the Southeast, which may be less than ideal for some borrowers. BB&T currently offers both home equity loans and HELOCs. Besides offering home equity lines of credit, BB&T also allows borrowers to get fixed-rate HELOCs.
When applying for equity loans, you can either go to one of BB&T’s branches, speak with a loan officer over the phone, or head to the website and prequalify online. The online prequalification process is extremely similar to what we’ve with other lenders. Firstly, you’ll need to provide personal information like your name, current address, marital status, and phone number. After that, you’ll need to punch in information concerning your assets and income, then provide BB&T with information about the loan you’d like to take out.
Once you finish the first part of the application, you’ll be presented with the best rates that you can get at BB&T. Once you choose the plan that suits you best, you’ll be required to upload documents to verify the information you’ve provided. The documents are uploaded via a secure connection, guaranteeing the safety of your data. Additionally, you can electronically sign documents and loan disclosures during the application. After you’ve sent all the required documents, you’ll have to wait for a home appraisal and approval by BB&T.
The duration of the whole approval process is not divulged. Once everything is set, you’ll have to head over to a BB&T branch to finalize the loan.
Terms and Fees
BB&T is very opaque when it comes to finding out the actual rates and fees. The site offers little to no information about home equity loan requirements, fees, or APR ranges. This is our biggest gripe with BB&T, but then again this is far from the only lender that provides very limited information about loan terms.
What we managed to find out is that there are no origination fees for HELOCs (if the loan is under $500K), but that the equity loan closing fees can be somewhat steep. Additionally, if BB&T covers origination fees for you and you close your loan account within three years or earlier, you’ll have to cover those fees yourself.
What BB&T does state is that HELOCs come without any closing fees. Additionally, you can apply for fixed-rate HELOCs, although that comes with a $50 setup fee. On top of that, appraisal fees are also covered by BB&T.
While the bank doesn’t display APR ranges, its rate calculator does reveal some information. The lowest APR we could get there was 2.49%. The repayment duration is up to 30 years.
The lender does not divulge any information about the minimum requirements needed to get a loan.
BB&T’s main allure is the lack of certain fees and the ability to apply for fixed-rate HELOCs. While the APR values we saw in its calculator seemed low, the lack of transparency when it comes to other fees and general APR ranges is this lender’s main drawback.
- APRs start at 2.49%
- No appraisal fees
- Offers fixed-rate HELOCs
- No origination fees for HELOCs
- Easy online application
Regions Bank is another lender on our list that primarily does business in the South and the Midwest. This lender currently services 15 states and offers both home equity loans and HELOCs. While its state coverage is limited, Regions offers very competitive home equity loan and line of credit rates, and allows lenders to take out loans as small as $10,000.
Regions Bank allows borrowers to apply for home equity loans and HELOCs. The lender’s portal is pretty robust and easy to use, taking you carefully through each necessary step. You can expect to have to provide the standard information required for most loans: personal details, SSN, income, property, and employment information.
The whole application process takes a bit longer than what we’ve seen with other lenders, but it does prequalify you and gets everything ready for the loan finalization. You just need to wait for a loan officer to get back to you, after which you just send the necessary documents and you’re ready to get your loan. The final step does require you to go to a branch to sign the documents for the loan.
Terms and Fees
The APR ranges for both equity loans and HELOCs are some of the lowest we’ve seen. For home equity loans, the APR range is 3.25% to 11.625%. When it comes to HELOCs, the current variable APR ranges from 3.75% to 10.75%.
What’s great about getting HELOCs from Region is that for the first six months you’ll be paying a low introductory APR of only 0.99%. On top of these low rates, the LTV ratio is also fairly high. For home equity loans, it’s 89%, which is above the industry standard. For HELOCs, it’s the usual 80%.
The repayment terms are seven, 10, 15, and 20 years. HELOCs come with a 30-year repayment period (10-year draw, 20-year repayment). Regions Bank offers loans starting as low as $10,000 and going up to $250,000 (equity loan) and $500,000 (HELOC).
As for fees, Regions covers the closing costs if they are for loans of $250K or less, with fees going up to $500 for bigger loans. If your line of credit is terminated within two years or less, then you’ll have to cover these costs.
Besides the usual requirements such as a credit score of at least 620 and 43% income-to-debt ratio, you need to have at least $10,000 in equity in order to apply. That’s very similar to what we’ve seen with other lenders.
With competitive rates for home equity products, no closing fees, and a bunch of other great promotions, Regions Bank is a great choice for lenders of all stripes. The only downside is that this lender only services 15 states.
- Very low APR rates
- Offers smaller loans
- Closing costs covered by Regions
- 89% LTV ratio for equity loans
- Low eligibility requirements
Citi is one of the largest and oldest financial institutions in the world. Founded back in 1812, it has since spread its network all over the US. Nowadays it services all states apart from Alaska. Citi offers home equity loans and HELOCs at fairly low rates, without application and closing fees.
Citi offers a very streamlined online application experience. The online form allows you to quickly fill out the application. The interface for the application form itself is a bit outdated, but that won’t inhibit borrowers in any way.
The information required in the application includes basic details, information about your property and mortgage, what kind of loan you want to get, and so on. It only takes a minute or two to complete the full application, then you’ll just need to wait for a Citibank loan officer to contact you. At that point you’ll send the required documents and finalize the deal.
You can also see what’s the best rate you can get and apply for a loan over the phone by talking to one of Citi’s loan officers. Additionally, you can always check the status of your application online. Citibank does not state how long the application process lasts.
Terms and Fees
As we’ve touched upon before, Citi does not charge application and closing fees for either equity loans or HELOCs.
You can get home equity loans worth between $25,000 and $300,000. The minimum loan amount is a bit steep when compared to other lenders, as we’re used to seeing $10K or $15K minimums. The current rates start at 6.25%, which is not among the best, but still not terrible. The repayment period here is between five and 30 years.
With HELOCs, you can get between $10,000 and $1 million. For the first six months, you’ll be paying a very generous introductory rate that’s as low as 1%. After that, the rate starts at 3.99% and depends on various factors like your income and credit history. HELOCs have a 30-year repayment plan: 10 years for the drawing period and 20 for repayment.
Citi also offers various rate discounts if you opt in for automatic payments, for example. Additionally, for HELOCs, you can make interest-only payments during the drawing phase.
If you want to get the lowest rates, you’ll need to have a credit score near the 700 mark. The precise eligibility requirements are not revealed, but we can safely assume they also include a solid debt-to-income ratio as well.
While Citi does not separate itself from the competition in any obvious way, its home equity loan/HELOC offer is solid across the board, with a wide range of discounts and low introductory APR rates.
- HELOC loans up to $1 million
- Low introductory rate for HELOC
- Offers various rate discounts
- Allows interest-only payments during the drawing phase
- Solid online portal
Fortunly’s Guide to Home Equity Loans and HELOCs
There are two types of consumer equity financing: home equity loans and home equity lines of credit. Conceptually, they are fairly similar. Both tap into your home equity as security for the loan.
Home equity loans put the full borrowed amount at your disposal immediately. The amount that you can borrow is usually capped at 85% of the equity you have accumulated in your home. The home equity loan is ideal when you need a large amount of money to spend on something specific - home improvement projects, weddings, or costly emergencies.
Even leading home equity lenders have a lower cap on loans, usually between $10,000 and $25,000. If your immediate needs call for a smaller amount, line-of-credit financing is probably a better solution.
A HELOC gives you a revolving line of credit, much like a credit card. You can access funds whenever you wish and withdraw as much or as little as you like, so long as you don’t exceed your credit limit.
Banks offer lots of ways to access HELOC funds. These methods usually include checks, credit cards, or online transfers. One of the greatest pros of getting a HELOC is that you don’t pay interest on the whole sum at your disposal, but only on the funds you’ve withdrawn.
A HELOC loan usually has two phases - the draw period and the repayment period. These two periods last up to 30 years combined. During the draw period, you have access to the revolving line of credit, paying interest only on the outstanding loan balance. This period usually lasts five to 10 years.
After the draw period, the repayment period begins and you can no longer borrow against your equity without a refinance. If you have an outstanding balance, you must hope that you have the best interest rate. In this phase, both principal and interest must be paid according to a monthly schedule.
Lenders with the lowest rates usually have a 620 or 640 credit-score minimum for equity lending.
This largely depends on your financial situation and mortgage balance. If you need a large infusion of money and you’ve got the means to pay it back, it is definitely worth it. Most other kinds of loans have higher costs and higher interest rates.
Loans are better for one-time funding such as paying off student loans or making improvements in homes. Lines of credit are better if you need a pool of money to access over a longer period.
While many lenders charge closing costs, some of the lenders do not assess them. However, this can mean that you must reimburse other costs or pay other fees. When evaluating fees, it’s important to assess the complete list.